Tuesday, August 06, 2013

Over the years, we've seen many flavors of myths and theories about "reddit the business." Some of them have been plausible, some have been ghastly, and some have been downright reptilian. We want to address some more common recurring myths we see out there and be as transparent as possible about the size of the company, our business structure, profitability, and other questions we've encountered.

reality: reddit is not owned by Condé Nast. reddit used to be owned by Condé Nast, but in 2011 it was moved out from under Condé Nast to Advance Publications, which is Condé Nast’s parent company. Then in 2012, reddit was spun out into a re-incorporated independent entity with its own board and control of its own finances, hiring a new CEO and bringing back co-founder Alexis Ohanian to serve on the board. The best characterization might be to say that reddit is a “part-sibling-once-removed” of Condé Nast.

myth: reddit has a secret group of shadowy investors.

reality: We've never released a full list of reddit shareholders, but not due to any desire for secrecy. Rather, it's because shareholder lists are typically boring financial information no one cares about, even when they are made public (quick: name the major shareholders of any major corporation). If anything, the people who've invested in reddit are proud/eager to announce the fact, but we had originally requested that they refrain in order to avoid contributing to startup funding hype.

reddit has 3 sets of shareholders: The largest shareholder is still Advance Publications. The second-largest set of shareholders are reddit employees. In the spin-out that occurred in early 2012, Advance voluntarily reduced its sole ownership to that of a partial owner in order to put ownership in the hands of current and future employees. The third and smallest fraction consists of a set of angel investors. Collectively, these angel investors own less than 1% of the company and the amount held by any angel is actually less than that owned by any single employee.

Yun-Fang Juan, previously at Facebook, worked on self-serve ads engineering

We asked all the angel investors to invest as themselves, not through their institutional venture funds (if they were affiliated with one). We’ve also asked them if any of them want to do AMAs, so you might see that in the near future.

Expenses are projected through the end of 2013, revenues are as of 2013 Q2 - numbers have been removed to thwart would-be Wall Street analysts. The graph is derived from our internal accounting.

myth: reddit (or Condé Nast or Advance) is trying to clean up to go mainstream, to prep the site for a sale or IPO.

reality: reddit is not preparing to sell or do an IPO. We value our independence more than money, and the company was already acquired once before (by Condé Nast) and survived due to a rare instance of corporate benevolence/indifference. Other companies who sell themselves usually don’t end up so lucky, while going public (IPO) means having to answer to short-term shareholders and irrational market pressures. We don’t want to risk either of those.

Condé Nast / Advance also never wanted to sell reddit, and rejected offers to buy the site, instead electing to spin it out into an independent entity and take a lessened ownership position specifically because they felt that a standalone reddit would be far more successful, culturally significant, and (one day) profitable.

reality: With the exceptions of a handful of incidents in very early years (e.g. Sears), none of reddit’s owners or investors have ever bothered to exercise influence over reddit’s operations or editorial decisions. Even reddit’s servers are controlled via an AWS account not shared with any other entity, only reddit administrators have access to it. Control of this account was also never transferred to or shared with Condé Nast during the period when they were owners of reddit.

myth: reddit pays for celebrities to do AMA interviews and writes all the answers for them.

reality: reddit does not get paid nor does it pay for celebrity AMAs. We also don’t write any answers for them. To be absolutely transparent, some or all of the following things do happen:

people contact us asking us to “allow them” to do an AMA

people contact us asking to pay for an AMA

reddit contacts people inviting them to do an AMA

In all of the above cases, we explain that an AMA is something that anyone with a notable life experience can do, and we may offer them help for free, in which “help” consists of helping schedule AMAs or explaining what an AMA really is and how to execute an AMA well - from signing up for a reddit account to what to expect from the audience to how much time they should try to set aside. We don’t accept payment for any of this - AMAs are by and for the community.

Sometimes people (e.g. studios, filmmakers) will buy ads on reddit to support an upcoming film or television show. While the ad campaign is running, they may also convince the actors to do an AMA — obviously they understand that this has positive promotional effects. Or, occasionally after a particularly good celebrity AMA, the celebrity (or their agency) will create an ad just to thank their fans — recent examples were J.Cole and John Malkovich.